Keycorp
Q2 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +1.06%.
Did KEY Beat Earnings? Q2 2025 Results
KeyCorp posted a solid second quarter in 2025, with earnings per diluted share of $0.35 beating the $0.34 consensus estimate by 2.25%, while revenue of $1.83 billion edged past the $1.80 billion expectation by 1.55%, even as reported revenue fell 31.6% year-over-year amid ongoing balance sheet repositioning. The primary engine behind the beat was a 28% surge in net interest income to $1.15 billion, fueled by lower deposit costs, the repricing of maturing low-yielding securities and swaps, and an improved funding mix that pushed the net interest margin to 2.66%, up 62 basis points from a year ago. Investment banking and debt placement fees added further lift, climbing 41% year-over-year to $178 million on strong syndication and equity issuance activity, with Scotiabank, which holds a 14.9% stake in KeyCorp, anticipating a meaningful profit contribution from its holdings this quarter. Management raised its 2025 net interest income growth outlook to 20-22% and now expects average loans to decline only 1-3%, an improvement from the prior 2-5% forecast, signaling growing confidence in the company's recovery trajectory.
- Net interest income up 28% YoY driven by lower deposit costs, reinvestment of maturing low-yielding securities, and fixed-rate asset repricing
- Net interest margin expanded 62 basis points YoY to 2.66%
- Investment banking and debt placement fees up 41% YoY to $178MM reflecting strong syndication, CRE, and equity issuance activity
- Total deposit costs declined to 1.99%, with cumulative down interest-bearing deposit beta of ~55%
- Commercial loan growth of $2.1 billion in Q2 driven by C&I loans
- Credit quality improvement with criticized outstandings declining for sixth consecutive quarter
- Significant positive operating leverage of 14% on total basis and 3% on fee basis YoY
- Assets under management reached record $64 billion
- Commercial payments fee-equivalent revenue grew 9% YoY
“Our second quarter results demonstrate continued strong momentum. Revenue was up 21% year-over-year driven by our clearly defined net interest income tailwinds and 10% growth in noninterest income, while expenses grew 7%. Sequentially, net interest income grew 4%. Credit quality continues to trend in a positive direction with overall credit migration improving for the sixth consecutive quarter.”
KeyCorp CEO, on the earnings call
Forward Guidance & Outlook
KeyCorp raised or updated several 2025 full-year outlook items. Average loans are now expected down 1-3% vs. 2024 (previously down 2-5%). Ending commercial loans are expected up ~5% vs. year-end 2024 (previously up 2-4%), with ending loans up ~2% vs. year-end 2024 (previously flat). Net interest income (TE) is expected up 20-22% year-over-year (previously ~20%), with NIM of ~2.75% in 4Q25 (previously 2.70%+) and 11%+ NII growth in 4Q25 vs. 4Q24 (previously 10%+). Adjusted noninterest income is expected up 5%+ vs. 2024 adjusted baseline of $2,645 million. Adjusted noninterest expense is expected up 3-5% vs. 2024 adjusted baseline of $4,520 million. Net charge-offs to average loans are expected at 40-45 basis points. GAAP tax rate is expected at ~21-22% with a tax-equivalent effective rate of ~23-24%.
KEY YoY Financials
KEY Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.